A nice little earner

WHEN Richard Reid boarded a transatlantic flight with plastic explosive hidden in his shoe, he managed to slip through the terminal and onto the plane unchallenged by airport security. That was four years ago. Had Reid tried the same thing after the introduction of a new passenger screening technology developed in the UK, he would not even have reached the duty-free shop. So claims ThruVision, a company with roots in government-funded research that has built a scanner that can spot concealed items such as drugs, explosives or weaponry.

The company's technology analyses terahertz waves - radiation that lies between infrared and microwaves on the electromagnetic spectrum. "The scanner is so sensitive it can detect objects hidden under clothing on a person who is 15 metres away," says Jonathan James, CEO of ThruVision, who already has customers in security queuing up.

And here is where the device truly breaks new ground: ThruVision is the 1-year-old spin-off of a public-sector research establishment (PSRE), Rutherford Appleton Laboratory. It is rare for research from a PSRE to yield marketable products, let alone in such a brief time, but if the scanner makes it, a portion of any profits generated will go back to its public sector inventors.

The UK government has ploughed millions into the public sector over the past few years to encourage the commercial exploitation of research, and the results are beginning to surface. The private sector has historically been reluctant to invest in the blue-sky research of the public sector, but government money aimed at turning that research into commercial products has helped institutions start to attract investment. ThruVision won the support of international venture-capital heavyweight Porton Capital, which invested £500,000, and other institutions are having similar success.

This is a far cry from the picture of the public sector painted by the 1999 Baker report to the Treasury, which criticised PSREs for failing to exploit the first-class science they produced as universities do. One of the main frustrations PSREs faced, the report concluded, was that the private sector was unwilling to risk investing in early-stage, unproven ideas, yet the institutions could not afford to prove commercial viability. In this, they are in a different position from the universities. Robin Brighton, director of consultancy firm SQV, who evaluated PSRE commercialisation for the Department of Trade and Industry in February 2005, explains that PSRE funding is tied to specific activities, whereas universities have a block grant to use at their discretion. So while many PSREs carry out research with commercial value, they need dedicated funds to explore that potential.

In 2001, acting on the Baker report's recommendations, the government allocated money to commercialisation in the form of a new Public Sector Research Exploitation Fund (PSRE Fund). The DTI awarded 19 PSREs a total of £10 million of public venture capital to develop potential products to a stage at which they could be successfully marketed to the private sector. In 2004, a second round of funding allocated £15 million to a further 16 PSREs.

The Council for the Central Laboratory of the Research Councils (CCLRC) got the lion's share of the initial round, receiving £4 million. It used this to set up the Rainbow Seed Fund, a collaborative venture capital scheme. It was Rainbow money that allowed Rutherford Appleton Laboratory to set up ThruVision. "We secured £250,000 from the fund in 2004, which was invaluable in building the business. It enabled us to recruit our core team to research and develop early prototypes," explains James. "With the Rainbow money and another £500,000 from Porton we could move very, very fast, and as a result we're shipping our first orders already."

The technology behind the scanner dates back to the UK's space programme, when it was used to probe the atmosphere and was instrumental in detecting the ozone layer. But it's a long stride from a research tool to desirable product, especially when it comes to navigating the cultural chasm between the public-sector mindset and the short-term goals of the commercial world. "Men in suits can be viewed with suspicion, I've seen that myself," admits James. "But once it was established that there was no threat to the PSRE scientists' important public-research missions, I was amazed by their enthusiasm and the breadth of their creativity and interest in the technology's potential."

According to James, the government is on the right track with its drive to set up technology transfer companies in the public sector that trawl through research, looking "outside the box" for opportunities. The idea is not new - universities have been doing it for decades. However, such spin-offs have had mixed success and some doubt the wisdom of extending the scheme to PSREs. Jacqueline Senker at the University of Sussex's Science Policy Research Unit, one of the authors of a 2003 report for the European Commission on European technology transfer policy, claims that the Medical Research Council is the only success story in the UK so far.

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